Are We Ready For Negative Interest Rates?

George Yacik - Contributor - Fed & Interest Rates

With interest rates on 10-year Japanese government bonds already deep into negative territory and comparable German bunds just a basis point or two away, most of the world’s safest debt instruments are trading below zero. With the notable exception of U.S. Treasuries.

While we’re still a long way from reaching that point – the benchmark 10-year Treasury note ended last week at 1.64%, its lowest level in nearly a year-and-a-half and down more than 60 basis points so far this year – it’s certainly not too early to start thinking about it. After all, if it can happen in Germany and Japan and several other countries, why not here?

Switzerland’s 10-year government bond closed last week at negative 0.50%, while the comparable Japanese bond ended at minus 0.15%.
Germany’s 10-year bund, the benchmark for the euro zone, closed at just two basis points above zero. The average yield on all German government debt outstanding is now below zero.

In real life, this means that if you buy a Swiss or Japanese bond today and hold it to maturity, you’re guaranteed to lose money. Such a deal.

What’s driving this madness? Continue reading "Are We Ready For Negative Interest Rates?"

One Sentiment Gauge in Europe Reaches Epic Proportion

A visual history of complacency and fear as seen by the 10-year spread over German Bunds

By: Elliott Wave International

The one-two punch 2014 winter storms that battered the southeastern United States left $13.5 million in damages in Georgia alone and thousands of residents displaced due to burst pipes and power outages. I am one of the displaced. Three months after the flood, I'm still living out of suitcases in a hotel while my apartment gets rebuilt.

I'm ashamed to admit before Icepocalypse, I had the least comprehensive homeowner's insurance. Why bother, I thought. This is Atlanta. The only blizzard this city's seen in the last decade is on the dessert menu at Dairy Queen.

But now, you better believe the first thing I'm going to do when I move back in is upgrade my policy to cover all and any acts of man and God -- fire, tornado, sharknado, alien invasion, you name it.

It's human nature. You can never truly prepare for the worst until you experience it first-hand. Then, and only then, do you go above and beyond to protect your health and welfare. Continue reading "One Sentiment Gauge in Europe Reaches Epic Proportion"